Official announcements from Brazil's central bank or credible financial news outlets

Brazil's Central Bank Unexpectedly Hikes Selic Rate to 12.25%, Signals More Increases

Dec 11, 2024, 10:07 PM

Brazil's central bank, in an unexpected move, raised its key interest rate, the Selic, by a full percentage point to 12.25% in its last meeting of the year. This decision, which was unanimous among the nine directors of the central bank, marks the third consecutive hike and comes as a surprise to the financial market, which anticipated a smaller increase of 0.75 percentage points. The hike is aimed at controlling inflation expectations and restoring investor confidence amidst a challenging economic environment. The Copom (Monetary Policy Committee) signaled that it expects two more rate hikes of the same magnitude in the coming months, potentially bringing the Selic rate to 14.25% by March 2025. This aggressive tightening of monetary policy is seen as a response to the deteriorating economic scenario, including concerns over the government's fiscal package stalled in Congress, which has significantly impacted asset prices and inflation expectations.